Hey, good morning! Rich here with Summit Life Group. One of the questions I hear a lot from agents is about lead costs: “How much does this lead cost?” or “How much are these leads?” It’s a good question, especially if you’re an independent agent or considering becoming one. If you’re purchasing your own leads, whether from a vendor, your IMO, or you’re generating your own, lead cost can seem like a big focus.
However, many agents get overly obsessed with the cost of a lead. While it’s an important part of the equation, I find that many don’t ask the deeper, more important question: not just how much a lead costs, but how much it costs to acquire a customer. This is the critical factor.
Your lead cost and the quality of your leads do play a role in that equation, and so does your skill level, but understanding what it costs to acquire a customer from a particular lead source is more important than the actual price of the lead.
Lead Cost vs. Customer Acquisition Cost
We have experience generating and purchasing leads, ranging from as little as $5 to as much as $350, $400, or even $500 per lead. Some might think, “$500 for a lead? That’s crazy!” But again, what matters is understanding what it costs to acquire a customer. That’s the key question.
The next question you should ask is, “What is a customer worth to me?” For example, if you’re selling a product that brings in $500 or an average policy with an $800 premium, you need to understand what you’re willing to spend to acquire that customer. You should also consider the value of the customer in the first year, second year, third year, and so on.
If you’re selling something with an average premium of $2,000, you’re probably willing to invest more in acquiring that customer compared to a customer with an $800 premium. If you’re selling annuities with an average premium of $75,000, you’ll be willing to invest even more in acquiring those customers than you would for a $500 or $600 annual premium policy.
So, as an independent agent purchasing leads, the focus shouldn’t just be on lead cost. You need to understand how much it costs you to acquire a customer from a particular lead source.
Consistency and Long-Term Measurement
Another key point is that you need to stick with a lead source long enough to measure your numbers accurately over time. Many agents fall short because they don’t stick with anything long enough to truly understand the cost of customer acquisition. They become obsessed with lead cost, without realizing the importance of tracking the true cost of acquiring customers and learning if it’s a profitable deal for them.
The Real Focus
If you’re an independent agent, yes, lead cost matters. But what really matters is how much it costs you to acquire a customer and what that customer is worth to you, both in the first year and over the long term. You need to make sure that you are profitable in this business.
Another important consideration is the speed of acquiring customers. How long does it take you to acquire one? This factors into the overall profitability of your approach.
If you’re watching this and thinking, “That sounds complicated. I don’t want to buy leads,” then you may want to move towards a free-lead program, where you’re focused more on making sales and less on the complexity of lead acquisition.
At Summit Life Group, we support independent agents nationwide. Whether you’re looking to generate your own leads, purchase your leads, or are interested in a free-lead platform, we can help. If you’d like to learn more about Summit Life Group, fill out the link below to see if we might be a good fit for you.
I hope this helps. Make it a great day!
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